Should Stow City Council Lease to PEP Drilling Company?

I attended the public hearing in Stow on Monday July 23, 2012.  This was my first experience at Stow City Council and I felt the structure of the meeting was superb.  It made me wish that the council times were a little more convenient for us working parents.  I’m not certain where council stands on the issue of drilling.  They said they were going to draw up the contract with the company and council mentioned something about voting on August 2.  Hopefully they choose to be more forthcoming about their decision in the near future.

  He didn’t cover the hearing too much, but he did address the budget (another huge concern for residents of Stow).  Since I attended the hearing, however, I’d like to clear up a few things.  There was a great deal of Stow residents who spoke up against the drilling (I was one of them).  After talking to some other Stow residents in attendance, it was agreed approximately 2/3rds of those who were opposed were Stow residents. There were about 4 people who spoke for the drilling: The New Hope Church pastor, a resident, and two representatives from PEP (the drilling company). 

The Church sees drilling as means of earning more money and a way to lower their gas expenses.  In a struggling economy with a smaller congregation, this is a way they could take some burden off their congregation and still afford to operate.  They assured residents they haven’t had any problems with contamination at the well on their property.

Another resident who is for the well and the city leasing the mineral rights was not concerned in the slightest about drilling.  He felt there are enough problems with the city water supply- such as the fluoridation of the water supply (true—but a different argument all together).  In his eyes, the contamination to water couldn’t possibly be any worse and we shouldn’t be drinking city water anyway.

As for those who spoke against drilling that were from neighboring cities—the small group that travels city-to-city (Portage and Summit County) are from Shallersville.  They disclosed to council why they do this, and it's because they don’t want other cities to make industry-informed decisions, but rather informed decisions.  Information has to come from more than one source.

Other residents from other cities included Hudson (1), Kent (1), and Akron (1).  The one woman from Kent paid Stow taxes, just has a Kent mailing address-- so we should consider her a Stow resident.  Those in attendance from other cities said they were concerned because drilling is not limited to Stow.  Air travels and water travels, it’s not like we can build a bubble around the city and should contamination occur it would be limited to our city.  Neighboring cities such as Kent and Hudson have turned down drilling! So of course they’re concerned if we’re going to allow it.

One Stow woman had some questions for council: she wanted to know the company’s history.  Council couldn’t answer her question, they weren’t sure what kind of record PEP had.  You see; ODNR has cited this company with several pollution/contamination violations in Portage and Cuyahoga counties .  One would think that would be a first move for council to examine a company's track record considering council's concern is supposed to be to protect the citizens of their city.  This woman didn’t particularly have a stance on the issue: she just wanted more information about it. Something I hope all who spoke were able to provide her with.

The mayor did say she attended a meeting where a geologist spoke and felt residents needed to view his speech.  She said she would make the video publically available in the near future.  I hope the geologist was not affiliated with industry—It’s thus, not “unbiased”, it’s industry biased.  I see it all the time.  Tim McDonnell recently wrote an article: Smelling a Leak: Is the Natural Gas Industry Buying Academics?:

“It’s hard to find someone who’s truly independent and doesn’t have at least one iron in the fire,” said Ohio oil-and-gas-lease attorney Mark F. Okey. “It’s a good ol’ boys network and they like to take care of their own.”

Richard Muller, a long time denier of human caused climate change recently came out and said the science is there that proves our planet is warming and humans are the primary culprits.  While natural gas is touted as a clean burning fuel, to pretend that it has no impact on the emissions we put into the air is completely bogus.  So while those opposed to fracking typically discuss the worst-case scenario contamination, it’s also important to mention that everyday drilling impacts global warming.  What is Stow doing to reduce its carbon emissions?  Drilling definitely would not.

At the council meeting, several Stow residents expressed concern for contamination, property values, and taxpayer costs.  Nationwide homeowner’s insurance does not cover damages related to fracking .  According to the Ohio Oil & Gas Association, 99% of all wells utilize a chemical compound to stimulate— “frack”.  Many companies will not issue mortgages on properties on or around active well sites.  So essentially, these properties have no value.  What does that mean for other properties?  Their values drop as well.   A real estate agent of 25-years explained to council how this process affects home values and how difficult it is to sell a home near a well.

The contamination concerns are no joke either.  Ohio is rich in a toxic VOC: hydrogen sulfide (H2S).   H2S is corrosive to steel, highly toxic, and even deadly.  It killed a gas worked in 2009 in Ohio.  Do we want this getting into our air?  (Especially considering THERE IS A DAYCARE AT THIS CHURCH and schools nearby).

The mayor did state that the city has an evacuation plan should air contamination occur.  She was not sure if the fire department had a H2S sensitive air monitor.  This is something the city should invest in before allowing drilling to take place, should council choose to ignore the majority of residents present at the meeting (opposed to fracking) and drill anyway.

One thing I think more citizens should be concerned with, relating to the drilling leases is this: These leases are written by the companies looking to lease the land.  Imagine if a tenant went to the landlord with the lease, paid the security deposit, and only paid you a percentage of the money they were able to earn from the location.  Ha!  So why is it different with oil and gas industry?

The royalties are often paid based on the current market value of natural gas.  As of 07/25/12 natural gas was at $3.39 per thousand cubic feet.  According to Zacks Equity Research Firm , this percentage is down another 27.4% compared to this time in 2011.  Council indicated that they would be getting a 12.5% royalty—They did not specify whether or not it was a 12.5% of the Church’s royalty or of total production.  Either way, 12.5% of $3.39 is $0.42.  

It would be interesting to know the projected production figures for the well to develop a better understanding of the amount of revenue the city could gain for exposing the residents to the health, environmental, and economic risks associated with natural gas.  Additionally, how much of the earnings would be set aside if contamination were to occur or for depleting property values as a result of driling?

According to a Penn State University study in conjunction with a financial firm, a well will produce the most it ever will in the initial drill.  There will be a sharp decline afterwards (obtain your copy here ).  So the first monthly royalty will be the most the landowner will ever see from the royalty.   At the end of the day, how much does Stow stand to gain?

Let us keep in mind the damages caused by drilling as far as contamination is concerned are irreversible.  The amount of water utilized in the drilling process is chilling.  At the end of the day, drilling uses scarce resources to extract scarce resources.  How long until the water we drink is as expensive as the gas we put in the car?

There are several known carcinogens in fracking fluid.  While Ohio claims that chemicals are made public, there are still chemical mixes that are considered “proprietary”.  Just look at the industry sponsored website that discloses the chemicals in the fluid, “proprietary” is listed way more than once.

This industry has not been honest, they don’t perform an honest operation, and any errors often fall burden to the taxpayer: not the industry.  20-years later the planet is still feeling the effects of the Exxon spill .  The landowner can be sued for any problems that arise on other properties related to the drilling: after all, the company is just leasing the land.  Think you can get enough money out of your neighbor to cover the costs of your damages? A church that can't afford to keep their operations running most certainly cannot cover the costs of damages that may occur from fracking.  You should probably check with the company that provides your homeowner's insurance to see if they cover damages.

New legislation such as Ohio SB 315 requires companies to disclose the additives.  The company is required to state the name of the chemical additive, but some ingredients are considering "proprietary"-- Trade secrets (see picture or view the website yourself where companies disclose fracking chemicals ). This shouldn't be a big surprise considering the industry is working with the same PR firm as big tobacco.  Remember cigarettes don't kill?  Well, gas wells don't leak .

To add insult to injury, SB 315 states :

"(H)(1) If a medical professional, in order to assist in the diagnosis or treatment of an individual who was affected by an incident associated with the production operations of a well, requests the exact chemical composition of each product, fluid, or substance and of each chemical component in a product, fluid, or substance that is designated as a trade secret pursuant to division (I) of this section, the person claiming the trade secret protection pursuant to that division shall provide to the medical professional the exact chemical composition of the product, fluid, or substance and of the chemical component in a product, fluid, or substance that is requested.

(2) A medical professional who receives information pursuant to division (H)(1) of this section shall keep the information confidential and shall not disclose the information for any purpose that is not related to the diagnosis or treatment of an individual who was affected by an incident associate with the production operations of a well."

There are several websites available that have documented, peer-reviewed research of the health risks.  Finkel (PhD) and Law (MD) (2011) wrote an article addressing health concerns and concluded that a pause should be placed on all drilling practices until further research is performed.  They write, “Material Safety Data Sheets for 41 products used in fracturing operations, assessed the chemicals used in fracturing and found that 73% of the products had between 6 and 14 different adverse health effects including skin, eye, and sensory organ damage; respiratory distress including asthma; gastrointestinal and liver disease; brain and nervous system harms; cancers; and negative reproductive effects.” (1)

I personally urge council to vote down the leasing of mineral rights to PEP drilling company and to fill the well.  We do not need any adverse affects on our community, nor the traffic associated with it.  Our health is not something to put a price tag on.  Our communities should seek to invest in sustainable energy, because with sustainable energy we can build sustainable jobs and create a basis for a sustainable economic future.

(1) Finkel, M. L. PhD, and Law, A. MD (2011). "Drill for Natural Gas: A Public Health Cautionary Tale".  American Journal of Public Health.  Vol. 101, No. 5.